Page 155 - FebDefComp

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REQUIRED OR
PROVISION DESCRIPTION EFFECTIVE DATE OPTIONAL
Increased penalties for Failure to file penalties modified as follows: Applies to returns, Required
failure to file retirement Form 5500. $250 per day not to exceed $150,000. statements, and
plan returns Annual registration statement regarding separated, deferred vested notifications required to
participants. $10 per participant, multiplied by the number of days the be filed, and notices
failure continues, not to exceed $50,000. required to be provided,
Notification of change status in a plan’s registration information. $10 after 12/31/2019.
per day, not to exceed $10,000.
Withholding notices. $100 for each failure, not to exceed $50,000.
Treatment of custodial Within six months from the date the SECURE Act was enacted, the Awaiting guidance from Awaiting guidance from
accounts on termination Secretary of the Treasury shall issue guidance to provide that if an Treasury. Such guidance Treasury.
of section 403(b) plans employer terminates the 403(b) plan under which amounts are shall be retroactively
contributed to a custodial account, the plan administrator or custodian effective for taxable
may distribute an individual custodial account in‐kind to a participant years beginning after
or beneficiary of the plan and the distributed custodial account shall be December 31, 2008.
maintained by the custodian on a tax‐deferred basis as a section
403(b)(7) custodial account, until amounts are actually paid to the
participant or beneficiary.

Effective Dates that are Dependent upon Plan Year or Tax Year Beginning after 12/31/2019. Implementation of these
requirements are dependent upon the start of the plan’s plan year, or the employer’s tax year beginning after December
31, 2019.
REQUIRED OR
PROVISION DESCRIPTION EFFECTIVE DATE OPTIONAL
Increase in 10% cap for This provision raises the escalation cap for automatic deferral increases Plan years beginning Optional
automatic enrollment from 10% of pay to 15% of pay. In the first plan year the default after 12/31/2019
safe harbor after 1st plan contribution rate cannot exceed 10% of pay.
year
Rules relating to election 1. Eliminates the safe harbor notice requirement for plans satisfying the Plan years beginning This is a rule change
of safe harbor 401(k) ADP test safe harbor by making a nonelective contribution. after 12/31/2019 affecting all safe harbor
status 2. A plan may be amended to become a safe harbor plan with 401(k) plans that satisfy
th
nonelective contributions at any time before the 30 day before the the safe harbor by
close of the plan year; or, the plan may be amended on or after the making a nonelective
th
30 day before the close of the plan year, as long as the amendment contribution.
is made by the last day for distributing excess contributions (generally
the close of the following plan year) and the nonelective contribution
is at least 4% of employee’s compensation.
Increase in credit For employers with up to 100 employees, the annual tax credit Tax years beginning after Work with your tax
limitation for small previously capped at $500 is increased to the greater of 1 or 2: 12/31/2019 adviser or ERISA counsel
employer pension plan 1. $500, or to determine if this credit
startup costs 2. The lesser of: (a) $250 for each employee of the eligible employer is available to your
who is not a highly compensated employee and who is eligible to organization.
participate in the eligible employer plan maintained by the eligible
employer, or (b) $5,000.

The credit applies for up to three years.
Small employer automatic This is a new tax credit for small employers of up to $500 per year Tax years beginning after Work with your tax
enrollment credit available to a plan that includes an automatic enrollment feature. The 12/31/2019 adviser or ERISA counsel
credit is in addition to the plan startup credit allowed under present to determine if this credit
law and is available for three years. The credit is also available to is available to your
employers that convert an existing plan to an automatic enrollment organization.
design.
Portability of lifetime Participants in qualified defined contribution plans, 403(b) plans or Plan years beginning This is a rule change that
income options governmental 457(b) plans are allowed to take a distribution (or make after 12/31/2019 allows the employee to
a direct trustee‐to‐trustee transfer to another employer‐sponsored preserve a lifetime
retirement plan) of a lifetime income investment without regard to any income investment when
in‐service distribution restrictions if the lifetime income investment is such investment may no
no longer authorized to be held in the plan. longer be available as an
option under the plan.

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